Will you have to wait until 68 to retire? Or until you're 70? What state pension age proposals mean for you

The state pension age should rise to 68 by 2039 and the 'triple lock' guaranteeing annual payment hikes of 2.5 per cent should be ditched, says a Government-backed report.

The proposed age rise - which would affect anyone aged 46 or under today - tramples over existing Government legislation which anticipated the increase to 68 happening far later, between 2044 and 2046.

The state pension age is already due to rise to 67 for both men and women by 2028, but the Government tasked ex-Confederation of British Industry boss John Cridland with recommending any increases beyond that point.

Longer wait: Proposed state pension age hike to 68 would affect anyone aged 46 or under today

What state pension changes are proposed and how might they affect you?

Rises in the state pension age for those retiring between now and 2028 are already laid down, and the Government is not planning further changes during that period. See the box below for details.

Cridland has proposed making the next increase from 67 to 68 between 2037 and 2039, and added that further rises should not increase the state pension age by more than one year in any 10-year period, assuming no exceptional changes.

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HOW THIS IS MONEY CAN HELP

Although it's not official, such a timetable points to the likelihood of those in their 30s and younger today having to wait until they are 70 to draw their state pension.

Cridland has also called on the Government to abandon the valuable triple lock pledge, and link annual rises in state pension payments to increases in the earnings of people still in work.

WHEN WILL YOU GET A STATE PENSION?

The age at which women qualify for the state pension is in the process of rising from 60 to 65 by November 2018, with the exact date depending on the month you were born.

Between October 2018 and October 2020, both men and women's state pension age will increase to 66. And between 2026 and 2028, it will rise again to 67.

The changes are aimed at bringing women's state pension age into line with men's, and taking account of everyone living longer. Read more here.

At present, annual rises in the state pension are decided by whatever is the highest of price inflation, average earnings growth or 2.5 per cent, and Prime Minister Theresa May has promised to keep the guarantee for this parliament - effectively meaning until the next election.

MPs on the influential Work and Pensions Committee have already called on the Government to drop the pledge in 2020 on the basis it is costly and unsustainable - and one pensions expert said today that Cridland's intervention 'looks like the death-knell for the state pension triple lock'.

Meanwhile, the Government official numbercrunchers today issued a separate report alongside Cridland's, which looked at two alternative state pension age timetables for people who spend either 32 per cent or 33.3 per cent of their adult life in retirement. See the table below.

This harks back to ex-Chancellor George Osborne's statement in 2013 of a 'core principal' that people should spend on average up to one third of their adult life above state pension age. Adult life is considered to start at 20.

Under a 32 per cent scenario, the Government Actuary's Department found the state pension age could rise to 69 between 2040 and 2042. Under a 33.3 per cent scenario the state pension age could rise to 69 between 2053 and 2055.

Source: Government Actuary's Department

The Government will now consider the Cridland and GAD reports then decide whether to take up their suggestions this May. Today, Work and Pensions Secretary Damian Green, Secretary of State welcomed the contributions and added that they 'will provide important insight'.

The Government currently spends nearly £100billion a year on the state pension and other pensioner benefits.

What help might be offered to people affected by the changes?

Cridland has also suggested a package of measures to ease the impact on people he sees as most disadvantaged by increases in the state pension age. These include:

John Cridland: Ex-Confederation of British Industry boss John Cridland was tasked with recommending future state pension age increases

* A new 'mid-life MOT' to help people plan their later lives, addressing their lifestyle, skills, paid and unpaid work, and retirement income

* After the state pension age hits 68, extra means-tested support from one year before retirement for people unable to work longer through ill health or caring responsibilities

* Allowing people receiving Universal Credit to work part-time as they approach state pension age, and carers to receive statutory leave

* A new drive to enable older workers to become apprentice mentors and trainers

* Better financial arrangements for people who want to defer drawing the state pension and carry on working

* Direct Government communications to people affected by state pension age hikes - presumably to avoid another controversy where people claim they were left in dark, like the women affected by changes in the next couple of years.

Cridland was expected to consider the possibility of varying the state pension age to reflect different life expectancies across the country, but he stuck to the universal principle of one state pension for all in his report.

HOW MUCH IS THE STATE PENSION?

The basic state pension is currently £119.30 a week, but it will rise to £122.30 in April. It is topped up by additional state pension entitlements - S2P and Serps - accrued during working years.

That two-tier system has changed for people retiring since 6 April 2016, when it was replaced by a new 'flat rate' state pension. This is £155.65 a week at present, but it will rise to £159.55 in April.

Ex-Pensions Minister Ros Altmann suggests the cost of maintaining the triple lock could force up the state pension age further than it needs to go, and endorses the call for the guarantee to be scrapped.

Ros Altman: 'If we do drop the triple lock then there will be less pressure to keep raising the state pension age'

'The triple lock has become a political construct which purports to offer great protection while increasingly disadvantaging the oldest and poorest pensioners.

'The lock protects around £160 a week for the newest pensioners and only around £120 a week for older ones. It does not protect the Pension Credit which the poorest pensioners must rely on at all,' she said.

'Having the triple lock in place also puts more upward pressure on the state pension age which itself disadvantages poorer areas of the country and those in heavy manual occupations. So the unfairness and extra cost of the triple lock make it ripe for reform.

'Ensuring state pension income for the oldest and poorest pensioners is vitally important and all pensioners should have protection against cost of living increases and rises in earnings.

'I would like to see a double lock, which drops the arbitrary 2.5 per cent figure. Cridland suggests linking to earnings but I would like to see some protection against inflation too if that is rising faster. If we do drop the triple lock then there will be less pressure to keep raising the state pension age.'

Steve Webb, ex-Pensions Minister and now director of policy at Royal London, said: 'In the last Parliament MPs voted for the new arrangements on state pension age increases on the basis that people would spend two years in work for every one year in retirement.

'On this basis, no one at work today would have a pension age of 70. But on the more aggressive schedule that the government is considering, everyone in their twenties would have a pension age of 70.

'This is not what Parliament voted for and is clearly driven by the Treasury. It is one thing asking people to work longer to make pensions affordable, but it is another to hike up pension ages because the Treasury sees it as an easy way to raise money.'

On the triple lock, Webb added: 'The Triple Lock has helped to restore the state pension from a very low level in 2010. Whilst it should not continue indefinitely it would be right to review the policy at the start of each Parliament rather than abolish it now.

'Many people retiring in years to come will have very modest private pensions and the state pension will be of vital importance to them. We should be careful not to base policy for decades in the future on the basis of the incomes of people retiring now.'

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: 'This report is going to be particularly unwelcome for anyone in their early 40s, as they’re now likely to see their state pension age pushed back another year.

'For those in their 30s and younger, it reinforces the expectation of a state pension from age 70, which means an extra two years of work. This report also looks like the death-knell for the state pension triple lock.”

'The good news, in as much as there is any here, is that these measures will help to keep the state pension sustainable in the long term. The proposals around a mid-life MOT, employment opportunities for older workers and split deferral of the state pension should all help to extend working lives.'

Tom Selby, senior analyst at AJ Bell, said: 'Savers should brace themselves for an accelerated increase in the state pension age, with those in their 20s today potentially forced to wait until they are at least 70 to receive their state pension.

'This may seem harsh, but the reality is that – without reform – spending on the state pension will increase from 5.2 per cent of gross domestic product in 2016/17 to 6.2 per cent of GDP in 3036/37.

'As life expectancy continues to march ever higher, it was inevitable the Government would eventually look to take a grip on state pension spending.

'The triple-lock looks like the lowest hanging fruit here, although a Government scolded by the self-employed National Insurance debacle in the Budget will not want to break another manifesto pledge by scrapping it before 2020. However, the triple-lock’s shelf life now appears limited.

'Communication of changes to the state pension age will be absolutely critical and this must be front and centre in the minds of policymakers as reforms are taken forward. A state pension age of 70 will be a shock to the system for many people.'

Anna Dixon, chief executive of the Centre for Ageing Better, said: 'We welcome the review’s recommendations on wider actions to mitigate the impact of bringing the timetable forward for increases to the state pension age.

'For those with poor long-term health or disability who are unable to work up to state pension age, Cridland has made some recommendations on changes to the benefits system to reduce potential hardship that many will suffer as a result of these increases.

'Simply raising the state pension age without additional support will leave many people further away from a secure later life. Currently, less than half of people are working the year before they reach state pension age. Wider action is needed to make the labour market fit for purpose if people are to work for longer.

'We urge employers to make workplaces and employment practices more age friendly. This means recognising the contribution that older workers make, treating them fairly, especially when it comes to opportunities for development and progression, and tackling all forms of ageism and discrimination in the workplace.'

Graham Vidler, director of external affairs at the Pensions and Lifetime Savings Association, said: 'We are concerned by the proposal to accelerate the rise of State Pension age to 68.

'This proposal will hit people in their late 30s and early 40s - the very group who are too young to have benefited from final salary pensions and too old to benefit in full from automatic enrolment.

'The Government need to fully consider the consequences of this early rise for those who cannot stay in work until their late 60s.'

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